'Before we continue, let's understand what the Fed actually did: Rather than merely expanding the existing Term Auction Facility (TAF), they went several steps further. They created a new credit facility, the Term Securities Lending Facility (TSLF). Then, they empowered the TSLF to accept a broad range of private collateral - "AAA" private mortgages in addition to those that are agency paper. '
Good news for wallstreet doesnt really make a diff to the avg Joe. Oh look gas aslo closed at a record high 109.89 perfect
So this is like taking someone with bad credit and temporary giving them a good credtit rating for a month and then lowering it again 28 days later.
"The central bank's plan basically allows Wall Street's biggest institutions to put up troubled assets as collateral for loans, use the new capital to make money in the market, and then pay back the loan up to 28 days later. Though eventually banks would be forced to take the troubled mortgage-backed debt back on their books, the plan still takes short-term pressure off them. Many of these banks will release first-quarter earnings reports next week."
"This will not turn the economy around or fix all the problems in the markets but it should reduce the liquidity issue, at least for now," said Ian Shepherdson, chief economist at High Frequency Economics.
I'm reminded of a discussion on how the Fed took away the punch bowl in 2000.
B I G chunk of money went out to banks and was then fed directly to
Wall Street in December - in case all the lights went out on 1/1/2000.
Result: Huge rally in the dot.com market
But the money was due back, and went back, in April of 2000.
Helicopter Ben surely couldn't be changing his tune!